Nein, Nein, Nein

Nein, Nein, Nein

10th May 2016

The houses that Jack didn’t build

There is a housing emergency and ISME says the new government should make an emergency 999 phone call to Germany. It’s clear as clear can be that there’s no chance this country will ever get an easing of the national debt burden. That’s why we need to call Frau Merkel. Because Irish people and businesses took massive pain since 2008 and we have managed to, just about, claw our way out of the doo-doo in which our rulers and regulators managed to plant us. Economic indicators look good at the moment but, as usual, nothing – absolutely nothing – is being done about the housing issue, a crisis in the making since 2012. Reminder – this is 2016.

What’s good enough for Stavros isn’t good enough for Paddy?

On the other side of Europe the Greeks are having a torrid time. At ISME we try to be practical in our approach to problems. We don’t do blameys. We’re not really interested in whether the Greeks, and their approach to their national debts and taxes, are good, bad or indifferent. We have plenty of messes on our own plate, housing amongst them. However, because things are so bad now in Greece that they look like they’re heading for another financial crisis, there appears to be serious talk about debt right-offs for them.

€7.5 billion for three years should do it

The Germans owe us and owe us big. It’s now generally accepted that we effectively bailed them out (or their profligate banks) and not the other way around. So when Herr Kenny makes that emergency call to Frau Merkel he should not take nein, nein, nein for an answer. What he should look for (the mechanism is not important) is a wad of cheap, off balance sheet money, at zero per cent from some European source. This money – and we’re talking billions – should be made available to builders to build the 25,000 houses a year that are needed now. Based on some very simple maths the annual ask would be €7.5 billion and do this for three years only, to break the back of the problem. Give developers with approved projects 100% low-rate financing and put time limits, with penalty clauses, on those projects. Get houses built.

An elegant solution

This is a viable proposal. The demand for housing is there. People are going back to work so they can afford mortgages again. The economic outlook is looking brighter so people should have some confidence in having long term employment. Unlike much government spending (as we said they can find a way around this not being put onto the national debt) this would be a productive use of money. Just shy of 40% of the cost of a house comes back to the government in one way or another immediately. It would also take a chunk of people off the dole queues to build these homes. A surfeit of houses should kill off house price inflation and make rents affordable again. Apple and others won’t be complaining that their workers can’t get affordable accommodation.

The number is up

We try to be ever so helpful at ISME so to make it easy we’ve added Frau Merke’ls phone number below. Please note Taoiseach that they don’t seem to work Friday’s so don’t hang about. You can call the Federal Government’s Bürgertelefon on +49 (0)180 272 00 00 Mondays to Thursdays 8 am to 6 pm.